解决董事会中的风险（英文版）.pptx

,Proprietary and Confidential,ADDRESSING RISK IN THE BOARDROOMChallenges and solutions in the energy sector,Addressing Risk In The Boardroom3,CONTENTS,INTRODUCTION,4,4Addressing Risk In The Boardroom,INTRO- DUCTION,Alister Laird,Regional Director, Energy & Mining,In todays challenging market environment, it is more important than ever to ensure that key business risks are discussed andunderstood at the most senior levels.,The oil and gas industry has faced numerous challenges over recent years, not least due to the fall in oil prices which began in 2014. In adapting to this changing business environment, it is more important than ever that risk conversations are brought to the boardroom.,This ebook provides insights into the following key areas of risk:,Risks arising from M&A activity within the oil and gas industry as companies look to achieve operational efficiencies and private equity seeks an elevated return on investment from firms perceived as easy acquisition targetsPolitical risk remains a key consideration for the industry as the fluid and at times uncertain political situation within the region continues to presenta myriad of challenges to foreign and domestic investors and operators,Heightened levels of decommissioning as oil and gas companies decide that they cannot justify the capital expenditure required to extend the working life of ageing facilities under new environmental regulation,The threat of terrorism to the oil and gas sector is becoming more of a concern within the industry.The overall threat level in Asia continues to rise, as individuals return to the region, trained and radicalised in the Middle East, with core infrastructure representing an attractive targetThe exponential increase in cyber hacking in Asia also creates a clear challenge for the industry with malicious parties, including state backed groups, seeking to bring down energy and power providers as well as steal data for commercial gain,Addressing Risk In The Boardroom5,Part1,INCREASED INVESTMENTAND,M&A ACTIVITY,6Addressing Risk In The Boardroom,The oil and gas industry in Asia has seen a significant increase in investment and M&A activity recently. This has been driven both by oil companies seeking efficiencies in a bid to refocus and reinforce portfolio positions, as well as capital flowing in from private equity firms seeking to increase their exposure to a recovering industry. With government regulations seeking to provide more attractive terms for foreign investment in a low oil price environment, the trend for new investors is expected to continue in the near to medium term.There are a plethora of risks associated with the M&A process within the oil and gas industry from transaction risks to political risks. Whether theRisk Manager of an oil and gas major or an M&A professional, a firm grip of the sector and region specific risks associated with this type of transaction is essential in protecting your business, investment and reputation.,Risks to discuss in the boardroom,TRANSACTIONSTRATEGY,In the earliest planning stages of any investmentin the sector there are a number of key restraining and driving forces to investment which must be considered.,DRIVING FORCES- that permit investment,RESTRAINING FORCES- against investment,Border Disputes/War,Anti-foreign Ideology,Pressure Groups,Need For Foreign Investment,Integrated Local Business Community,International Arbitratione.g. ICSIDMembership,Strength Of Law & Order,Investor Government Influence,Political Violence,Economic Problems,Unstable Politics/Active Military,Environmental Issues,National Asset Protectionism,Bilateral Investment Treaties,Risk Transfer Activities,POLITICAL,RISKS,Addressing Risk In The Boardroom7,The above forces are clear indicators of the viability of any investment and can be considered as political risk exposure red flags. Oil and gas companies investing and operating in Asia are exposed to the following political risk perils:,In addition to the risks already discussed affecting M&A transactions, there are also a number of risks associated with an M&A transaction itself, including:,Breach of seller representations and warranties in the sale and purchase agreementUnexpected environmental liabilities,Unexpected tax liabilitiesContingent liabilities (including contingent litigious claims),TRANSACTIONRISKS,For a buyer, catastrophic damage and ensuing loss of cash flow and profits represent risks that may destroy the value of their investment. Where the transaction involves a share deal, a buyer may also face uncertainty with a seller seeking to pass on responsibility for claims arising from pre-closing activities. Legal advisers may be able to summarise the insurance in place but they will not be able to comment on the adequacy of cover in addressing these risks.,TARGET COMPANYOPERATIONAL RISKS,Political Violence,War & Civil War,Embargo,Selective Discrimination,Expropriation,Export Rights Cancellation,Concession/Licence Or Production Sharing Agreement Cancellation,Currency Inconvertibility & Non-transfer,Forced Abandonment Or Divestiture,Each of the above risks can have a tangible and significant impact on businesses top and bottom lines and should be monitored, managed and treated appropriately.,8Addressing Risk In The Boardroom,Solutions to discuss in the boardroomCredit and political risk insurance plays an important role in raising finance, improving terms of trade and mitigating risk from both an upstream and downstream perspective.,Oil and gas companies, their banks, commodity traders including the trading arms of energy companies, regularly purchase credit and/or political risk insurance to cover:Debt and equity financing for the purchase of upstream assets such as drilling rigs, FPSOs and FSRUsMedium and long-term EPC contracts and sales and purchases of refined productsInventory e.g. stocks of refined products in storageDebt and equity financing for new exploration and development projectsFor any given contract, asset purchase or project investment, boards should therefore consider whether credit and political risk insurance can help with the following:,POLITICALRISK,Improving the rate of return on capital invested,Mitigating cross-border countrypolitical risk,Leveraging internal country or counter- party credit limits,Raising financing or improving terms of financing,Addressing Risk In The Boardroom9,These risks can be transferred and mitigated through the use of specialist insurance products including:,Warranty & Indemnity Risks,Whilst most M&A targets undergo rigorous due diligence processes, it is not possible to diligence every single aspect of the business to ensure that the acquisition is risk free, and as with all other M&A transactions, buyers often have to rely on representations and warranties given by the sellers. The nature of such representations and warranties given by the sellerand the associated indemnification that the seller will provide in respect of them can be one of the most contentious aspects of the negotiation.Warranty and Indemnity (W&I) insurance is designed to transfer the risk of any post-closing breach of the representations and warranties from the sellers to the insurance market for a known fixed cost (the premium), allowing parties to successfully conclude M&A transactions more expeditiously. The policy mirrors, as closely as possible, the terms of the sale and purchase agreement.W&I insurance can be arranged and introduced to a buyers bid or a sellers tender process without cost until completion of the sale and purchase agreement.Such strategic use of W&I insurance facilitates a clean exit for the seller and frees up capital that may otherwise have been locked up in escrow. Similarly, W&I insurance is an attractive option for buyers who seek a higher indemnity cap or longer survival period than the sellers are willing to offer.,Environmental Risks,The oil and gas industry can be particularly exposed to environmental liabilities, given the nature of the industry. An insurance due diligence review can provide clients with insight into any existing insurance that may be in place but if there are issues arising from gradual pollution that may have occurred over time, such as clean-up costs and potential third party liability risks, this may not be covered. An Environmental Impairment Liability (“EIL”) policy may address these risks.,Tax Liability RisksIf known tax risks are identified during the transaction e.g. potential capital gains risks, it may be possible to transfer the risk of a demand from the tax authorities to the insurance market. Typically this may be available where the risk has a low probability (with the insured party obtaining a strong opinion on the likelihood from a third party tax expert). If the party who would otherwise be responsible does not wish to take on this risk (e.g. due to the potential amount that would have to be paid)this insurance may provide an attractive alternative.,Contingent Liability Risks,Insurance may be available for other deal specific risks for example if there is existing litigation against a target, the buyer is taking on the liabilities and cannot agree with the seller on the likely quantum of any award against the target (and hence how such costs should be factored into the deal price). Insurance might be available for such risks hence eliminating this as a point of contention between the parties.,Target CompanyAn insurance due diligence review will allow the buyer to understand the availability and adequacy of insurance protectionOperational Risksagainst catastrophic risks; the availability and cost of insurance for claims arising from pre-closing activities can also be identified, allowing the buyer to negotiate on the allocation of risk from a position of knowledge. In both instances, clarity on the related costs can be factored into forecasts and the related bid price. This complements the work of other advisers as a specialist insurance adviser will have a better understanding of the insurability of risks and the availability and cost of cover.,TRANSACTIONRISKS,10Addressing Risk In The Boardroom,Part,2,A FOCUSON DECOMMISSIONING,Addressing Risk In The Boardroom11,The term decommissioning encompasses the dismantling, removing, or sinking of platforms and topsides as well as the plugging and abandonment of risers, wells and pipelines. The process of removing existing structures from service is both complex and risky. There are a number of removal methods and each should be considered on their own merits, depending on the type of project:,It is inevitable that the decommissioning of producing assets will become increasingly prominent as low oil prices render more fields uneconomic, coupled with ageing assets working well beyond their intended life span. In Indonesia alone, it is reported that half of all offshore facilities are more than 20 years old. This trend is reflected across the region.As well as asking for technical proposals for the work, to identify cost and environmental exposures, governments are beginning to look for financial guarantees from oil and gas companies to ensure the plans can be executed successfully.,Some sources predict the global market for decommissioning contractors could be worthUSD100bnby 2030,Risks to discuss in the boardroomUnderstanding the cost implications of decommissioning will of course be critical, but there are a number of risks to consider including:,Environmental Management,Health & Safety,Technical Feasibility,Regulatory Concerns,Contractual Arrangements,12Addressing Risk In The Boardroom,This is both in the field and at the dismantling ports to receive removed structures and components. With little capital divestment opportunity for removed assets, liability and environmental risk have the largest potential economic impact.Environmental and liability risk can range from localised and short-term to wider, residual liabilities and are broader in scope than just oil and gas spills. Operators and contractors will need to consider marine growth, waste management, cuttings and seabed debris as well as wider socio economic impacts.On the other hand, the decommissioning of installations can also yield environmental benefits as installations can be submerged and converted to artificial reefs, as undertaken in the USA. Brunei, for example, has also had a rigs to reef programme since 1988 and Shell have towed a number of old jackets and platforms to designated reef sites.As well as working out the most practical physical solutions, country legislation in Asia is under developed. Governments are beginning to realise they have much to address, including financial security for decommissioning activities, including not only pollution and contamination but also liabilities arising from navigational shipping errors and diving accidents which can present long tail exposures.,Solutions to discuss in the boardroomIts clear that good risk management is vital as a risk mitigation tool for decommissioning. Operators and contractors alike must carry out environmental impact risk assessments for the project before a final decision on the decommissioning plan can be reached.Insurance is very much a protection of last resort but can nonetheless be essential to help transfer some of these risks. Specialised Decommissioning All Risks (DAR) policies have been developed, recognising the need for more bespoke coverage. These coverages are more liability led than property, given the main risks associated with decommissioning:,Third Party Liability (property damage/bodily injury) arising from performance of the decommissioning worksRemoval of Wreck insurance to cover removal of dropped objects, where it is required by governments or voluntaryPollution clean up: reasonable costs incurred in clean up of pollution or contamination of the sea or the property of a third party (no property damage or bodily injury required to make a claim)Onshore disposal liabilities: continued onshore liabilities in relation to disposal of the assets following handover quayside. Coverage can be in excess of disposal contractors third party liability insuranceExisting property and additional costs clause: sub limit for additional cost associated with the decommissioning project that are incurred as a result of physical loss/damage to existing property and/or the permanent works (the equipment being dismantled) arising out of an occurrence in connection with the project which include:,Additional marine spread costsMobilisationStand by chargesOffshore cancellation costs,Standby/termination & additional charter fees: sub limit for fees arising from damage to contractor vessels (depending on contracts),